Excerpt:.....mere or itself, that is to say that a mere failure to pay or non-payment by itself is not a dispute. failure to perform the contract and to pay the amount claimed may take place under such circumstances as may justly lead to the inference of repudiation and denial of the right of the other party. coupled with other circumstances a failure to pay a claim may constitute a difference between the parties. failure to pay under a claim of right is certainty a dispute. it may and should justly be inferred against the defendant, from his sphinx-like silence in an appropriate case .in chandanmull v. chandanmull when required to pay in accordance with the first award, preserved a sphinx-like silence. but a dispute may perfectly well arise when only one disputant is articulate and the other..........words or by conduct. though a mere failure to pay or non-payment by itself may not give rise to a dispute, repudiation and denial of the claim can justly be inferred from the conduct of the party and other circumstances.7. in this case, opposite party no. 1 issued a series of registered letters demanding payment. he issued notice in accordance with the arbitration clause for appointment of an arbitrator. in the notice, he alleged that he had demanded payment of his dues repeatedly and would invoke the arbitration clause unless his dues were paid. in my opinion, from the conduct of the petitioners maintaining a continuous silence, repudiation and denial of the claim asserted by opposite party no. 1 can justly be inferred. such repudiation or denial gave rise to a dispute 8. in the.....

Judgment:ORDER

R.C. Patnaik, J.

1. The petitioners in this revision contend that the learned Subordinate Judge has erred in law in appointing an arbitrator under Section 8(2) of the Arbitration Act when there was no dispute between the parties.

2. The opposite party No. 1 entered into agreement No. 7 F-2 of 1968-69 for 'construction of Drainage Sluice at Dhanua out fall on Kusabhadra right embankment'. He filed an application under Section 8 (2) of the Arbitration Act alleging that in course of the execution of the work he was asked to do a lot of extra items. The amount due to him for the work executed had not been paid in spite of repeated reminders. He had issued series of registered letters to the department demanding payment; but the petitioners failed to take any action. He issued a notice as per the arbitration clause for the appointment of an arbitrator. As no appointment was made within the period of 15 days from the date of receipt of the notice, the court might appoint an arbitrator. He filed a copy of the notice sent on 9-1-1982 and received by the Chief Engineer and others on 11-1-1982. In the notice, he alleged that he had repeatedly demanded payment of his dues and in his last notice, he had intimated that unless his legitimate dues were paid, he would invoke the arbitration clause for realisation of the dues.

3. It was urged by the petitioners before the learned Subordinate Judge that there was no dispute between the parties which might be referred to arbitration. Mere non-payment of dues did not give rise to a dispute. The learned Subordinate Judge rejected the contentions of the petitioners.

4. The existence of a dispute is an essential condition. If there is no dispute, there can be no reference. (See the observation of Rankin, J. in Uttam Chand v. Jewa Mamooji, AIR 1920 Cal 143). Lord Halsbury, L.C. observed in London & North Western & Great Western Joint Railway Companies v. J.H. Billington Ltd., 1899 AC 79 (HL):

'A condition precedent to the invocation of the arbitration whatever grounds is that a difference between the parties should have arisen; and I think that must mean a difference of opinion before the action is launched.........'

There can be no dispute with regard to this elementary proposition of law. This has been followed in a number of cases which I may simply note : AIR 1920 Cal 898 (2): Balmukund Ruia v. Gopiram Bhotica; AIR 1940 Cal 105 : Ladha Sing Bedi v. Jyoti Prosad Singha Dee and ILR (1950) 1 Cal 407 : Mathuradas Goverdhandas v. Khusiram Banarasilal.

5. The learned Government Advocate strenuously urged that failure to pay or non-payment did not constitute a difference or dispute. Mr. S.C. Mohapatra, learned counsel for opposite party No. 1, however, contended that the proposition advanced by the learned Government Advocate was too broadly stated and was not sound in law. According to him, facts and circumstances of the case change the complexion.

6. The authorities may now be seen. Russel says :

'Mere refusal to pay upon a claim which is not really disputed does not necessarily give rise to a 'dispute' calling an arbitration clause into operation..........'

(See Russel on Arbitration, 19th Edn. 1880).

Rightly has the learned Government Advocate urged that a dispute arises when an assertion of a right is made by one party and there is repudiation thereof by the other and relied upon Chandmull v. Nippon (AIR 1321 Cal 342). In the said case the appellant in the High Court wanted a variety of information from the respondents to enable him to judge whether the goods supplied were or were not according to the contract. He demanded production of shipment samples. The respondents declined to comply with the requests, Their Lordships observed :--

'......... But there was at no stage an assertion by the buyer that the goods had not been supplied according to the contract and consequently there was not and could not be a repudiation by the sellers of any such assertion..........'

'A failure to pay is not a difference, and the mere fact that a party could not or would not pay does not in itself amount to a dispute unless the party who chooses not to pay raises a point of controversy regarding, for instance, the basis of payment or the time or manner of payment.' (underlining mine) As it would be seen, emphasis has been added by use of the expression mere or itself, that is to say that a mere failure to pay or non-payment by itself is not a dispute.

In Nandaram Hanutram v. Raghunath and Sons Ltd. AIR 1954 Cal 245, a contention was urged before Bachawat, J. that the award was null and void as there was no dispute. Upon a consideration of authorities, the learned Judge held:--

'............The repudiation by the other party may be either express or implied and may be by words or by conduct. Failure to perform the contract and to pay the amount claimed may take place under such circumstances as may justly lead to the inference of repudiation and denial of the right of the other party. Coupled with other circumstances a failure to pay a claim may constitute a difference between the parties. Failure to pay under a claim of right is certainty a dispute.' I may also draw attention to a further observation in the selfsame decision:--

'..... .The claim of right need not necessarily be express. It may and should justly be inferred against the defendant, from his sphinx-like silence in an appropriate case .........' In Chandanmull v. Donald Campbell, (1919) 23 Cal WN 707 (P. C.), Lord Sumner, J. observed:--

'It is true that Mr. Chandanmull when required to pay in accordance with the first award, preserved a sphinx-like silence. It is true also, that it takes two to make a quarrel. But a dispute may perfectly well arise when only one disputant is articulate and the other stands mute when called upon to plead What is required is that one party should affirm and the other deny and conduct will do this as well as words. The respondents said in effect 'You owe the money and have no excuse for not paying it'. The appellants to my mind in effect retorted nonetheless eloquently though he held his tongue. 'I owe you nothing, I have a defence under the contract.' The repudiation can still be inferred even though the defendant maintains a sphinx-like silence, or remains mute or holds his tongue. His conduct may be considered more eloquent than express words of repudiation.

In Balika Devi v. Kedar Nath, AIR 1956 All 377, a Division Bench of Allahabad High Court observed:--

'It is true that Section 9 wilt be attracted only if differences or disputes have arisen between the parties. Such differences should exist at the time when the Court makes the order under Section 8..........' A repudiation may be either express or implied and may be by words or by conduct. Though a mere failure to pay or non-payment by itself may not give rise to a dispute, repudiation and denial of the claim can justly be inferred from the conduct of the party and other circumstances.

7. In this case, opposite party No. 1 issued a series of registered letters demanding payment. He issued notice in accordance with the arbitration clause for appointment of an arbitrator. In the notice, he alleged that he had demanded payment of his dues repeatedly and would invoke the arbitration clause unless his dues were paid. In my opinion, from the conduct of the petitioners maintaining a continuous silence, repudiation and denial of the claim asserted by opposite party No. 1 can justly be inferred. Such repudiation or denial gave rise to a dispute

8. In the result, the order of the learned Subordinate Judge is sustained and the revision lacking merit, is dismissed. Hearing lee is assessed at Rs. 100/-.